A sliver of land is holding back Asher Luzzatto’s plans to repurpose two downtown Denver office towers.
“We don’t even know how to move forward,” the 37-year-old developer said.
Luzzatto is in the midst of figuring out how to fashion 700 apartments out of the buildings at 621 and 633 17th St. He purchased the nearly 1 million square feet, plus associated parking, for just $3.2 million this spring.
But the deal, critically, did not include all the land underneath the buildings.
The block is encumbered with three ground leases. Two have more than 90 years remaining on their terms. But the third, a 6,650-square-foot parcel under the 633 17th St. building, has only 30 years left.
Luzzatto said the relative shortness of that term is scaring away capital.
“Even though there might be ways of developing around the ground lease, if we wanted to do the project as we’ve conceived it and designed it, we won’t get financing unless this ground lease is extended or bought out,” Luzzatto said.
The land is owned by Rhoda Krasner, who also owns the Lakeside Amusement Park just outside of Denver.
Krasner and her daughter, Brenda Fishman, did not respond to multiple requests for comment. Neither did their attorney, David Shore of Hellerstein and Shore.
And Luzzatto hasn’t heard much from them, either.
“There’s a point in our email chain where I sent 14 emails without response,” he said.
Krasner and her daughter stay out of the spotlight. The Denver Post wrote in 2024 that the two “keep their decisions close to the vest, rarely granting interviews.”
In 2015, according to Luzzatto, the downtown parcel’s value was reappraised, which is required to happen every decade. The rent was set at $42,500 yearly.
Luzzato said the previous owners of the 28- and 32-story buildings — first EQ Office, a Chicago-based real estate investment firm managed by Blackstone, and then briefly Denver-based E2M Ventures, led by Marc Perusse — sent checks in that amount yearly.
But in 2023, he said, Krasner stopped cashing them.
“We have records that they were sent, but never cashed,” Luzzatto said, adding he doesn’t know why.
Luzzatto, who is president of his family business The Luzzatto Co., closed on the building in early April. He immediately reached out to Krasner to renegotiate the lease. It wasn’t until last month when he received a concrete response.
“They want us to pay additional ground lease payments going back to 2015,” Luzzatto said. “Obviously we don’t have a legal obligation to do that, but they believe the property was worth a lot more in 2015 than our latest appraisal shows. There is a big discrepancy on what the value was in 2015.”
Krasner and her associates are not willing to discuss extending the lease or letting Luzzatto buy the land until that issue is resolved, he said.
“Unfortunately, that building is sort of stuck in somewhat of a zombie state because of it. You can’t get any investment into the property without extending the ground lease,” he said.
That includes even leasing the existing office space, he said, since those buildouts are often financed.
Luzzatto knew of the ground leases when he bought the property, and acknowledged it contributed to the deeply discounted purchase price. But he had expected to reach a deal more easily.
“I maybe incorrectly assumed that we were dealing with a rational actor because I felt like there was so much mutual benefit here that there’s no way we wouldn’t figure out an amicable solution,” he said.
Perhaps the biggest financier involved is Denver’s Downtown Development Authority, which has $475 million to spend on improvements around the city’s core.
Luzzatto is seeking millions of dollars from the quasi-governmental agency to make his project work. He does not expect to receive funding from them until this matter is resolved. Luzzatto is also under contract to buy the Denver Energy Center, which consists of two towers at 1625 and 1675 Broadway, for a similar type of project.
Luzzatto said he had his first phone call with Krasner’s lawyer Shore on Wednesday, but has not yet been able to speak with her or her daughter Fishman directly. He has about a month and a half to work out a deal before the DDA plans to give out more funding, he said.
“I just want them to sit at a table with me and figure this out together,” Luzzatto said.